- Switzer Report - https://switzersuperreport.com.au -

Buy quality in volatility

The ONLY certainty next year is VOLATILITY. With the combination of populist political leaders and less “monetary policy morphine” from Central Banks, the ONLY outcome can be volatility.

I think November gave you a taste of things to come in 2017. In November, Donald Trump was elected President of The United States of America and the market implied chances of a 25bp rate hike from the US Federal Reserve moved to 100%. The result was unprecedented short-term volatility and major sector and stock performance divergence.

It’s worth remembering that at one stage in November, US equity index futures were halted limit down (-5%), in fact, the US S&P futures traded in a 9.3% range during the month. Kerb trading kicked in which only happens in periods of extreme duress. I’ve only seen US futures limit down three times in my 23-year career. However, less than 24 hours later, all those losses had been eradicated and capital losses started stacking up in bond markets.